I just took a stroll down memory lane. The last time I paid for service at a dealership was to repair a 1996 Subaru. That car is long gone and subsequent Honda Fit, Toyota Prius, Prius Prime, Lexus hybrid, Prius V, LEAF and Tesla Model 3 have never seen a dealership (or service center.) I am somewhat atypical in that I perform simple maintenance at home but on the flip side I have close to zero mechanical aptitude.

Similar here. Last time a dealer actually "worked" on my car was clutch replacement for a 1990 Miata. I've taken vehicles in a few times since but they invariably put Hellen Keller on the case and "can't find anything wrong", so I end up fixing them myself anyway.

I am a pretty good shade tree mechanic and I've got the big toolboxes to prove it. None the less, all I do anymore is brakes and wheel bearings. Most cars are pretty reliable anymore but when you do have a failure it's likely to be the emissions control system or the transmission. I'm getting older and don't feel like wrestling a transmission out and I don't have the diagnostic equipment for troubleshooting emissions problems. If a sensor fails and I can get to it, i'll try replacing it first. Other than that, it goes down to my local mechanic.

Actually most customers are very loyal to their dealer unless they have a really bad experience.

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Any data to back up that statement ?

Some Googlling found

According to ICDP data, cars sold with service packages lead to 50% higher retained margin over the customer lifetime

This implies that cars sold without a service package has *at best* a ~ 60% return rate for service -- and likely quite a bit less. My (admittedly fuzzy) impression is cars under warranty are serviced by dealerships, although I really do not know if the dealership providing the warranty service is the same one that sold the car.

The reason most customers return to the dealer for service is that their car is still under warranty and they don't want to jeopardize the warranty by having an unauthorized mechanic work on the car. The reason they believe this is that is what the salesman and service manager told them so. Many Dealers reinforce this by throwing in a couple of "free" oil changes at the service center. Once the customer is conditioned to use the service center, they come back time after time. This is particularly true for older customers.

Retained margin refers to how many more customers come back if they bought a service plan. I.E. you can retain 50% more of the customers that you would have lost. If you had 75% retention before you added service plans then you expect to retain 87.5% with services plans. I actually have no idea what the numbers actually are but you get the idea. Service plans are a great way for a dealer to keep the service bays full and like most of the add-on services are high margin items usually sold by the finance guy.

The OP asked about tips for buying a car for low cost. I sold new cars for a year and can give some pointers. First, as a rule, dealerships don’t make much money on new cars as they are too easy to cross shop from multiple dealers. Of course dealerships will try to make money on a new car, and occasionally do, but generally they don’t expect to make much. For new car sales, dealers generally make money in only a few places:

Financing (a spread on the loan interest between the bank rate and what you pay), service contracts, GAP insurance, etc.

Obtaining the trade below value

Dealer and Handling (D&H) fee. This is often non-negotiable

Manufacturer incentives for unit count

Manufacturer incentives for high satisfaction scores

The last one is the most important to the salesperson: survey satisfaction scores. Much of the leverage you have in a negotiation for a new car is increasing the unit count of the dealership and giving a high satisfaction score on the manufacturer survey. In general, dealerships do not retail their own trades. There are exceptions, but the dealer already knows the trade wholesale value and expects to receive that. The wholesale value is known as ACV (Actual Cash Value). In general, any customer who is not face-to-face with a salesperson is just kicking tires. The best way to negotiate is to go to the dealership and talk in person. For the best effect, schedule your visit to the dealership so that the salesperson is available. Schedule on a slow day, such as Thursday. Thursdays are notoriously slow for car sales and are known as “Suicide Thursday” because so few sales happen.

In general, sales happen first by “landing the customer on a car,” which means finding the car the customer can get excited about owning. If the customer is not excited about owning the car, nothing else matters. Once an appropriate car is found, the customer is enticed to fall in love with the car, called “licking the paint.” The test drive is one tool to get the customer excited. Once the customer is licking the paint, then it is time to negotiate.

By this time, the salesperson should know what car the customer wants, what the customer is willing to pay, and what the customer is able to pay. The salesperson should also be aware of the primary value triggers the customer has, such as total cost vs. utility, amount saved below blue book or invoice, or monthly payment amount vs. utility. By the way, as a buyer, you should be keenly aware of your own value triggers before you step foot in a showroom floor. No value trigger is inherently more valid than any other, but we all tend to favor one of them.

Armed with all of that knowledge and a customer who is excited about a car, the negotiation begins. The salesperson will ask for a commitment on what you will do to buy the car right now. Before you go to the dealer, you should have thought this through and have this number firmly planted in your mind. If you will not commit to a purchase, then you are not a serious buyer. The salesperson knows that. Do not be afraid to make that commitment. After all, you already made that decision before you drove to the dealership. The salesperson will take your commitment to the person working “the desk” which is often an intimidating area surrounded by glass. The desk manager will respond with the first offer, called “first pencil.” The first pencil will not be what you committed to; the dealership is trying to make some money. You and the salesperson will go back and forth, you reiterating your offer, the salesperson explaining why the dealership offer is appropriate, until the salesperson asks for a compromise between your original offer and the offer from the desk. The salesperson will return to the desk and explain to the desk manager what is happening in the negotiation then return with the second pencil, which will be a number between what you compromised on and the first pencil. You will go back and forth again (unless you agree) until the salesperson asks for another compromise. When the third (and final) pencil comes back, the floor manager (or sometimes even the desk manager) will be there to try to close the deal or to thank you for coming in. In general, the third pencil has all of the profit removed, and sometimes is at a loss for the dealership.

Since everyone seems to think that their trade is worth more than the dealer is offering (and usually the dealership does not want your trade anyway), at any time feel free to suggest that you “kick the trade” which means to exclude it from the negotiation. Many dealerships are relieved when a customer offers to kick the trade. At the same time, if you have done your homework and know the true ACV of your trade, feel free to ask the dealer to “step up on the trade” which means to increase the amount offered.

OK, with all of that in mind, here are some tips to get the best price on a new car.

Do your homework to learn what you want and what you are willing to pay. Be realistic; there are no free lunches here.

Understand your own value triggers.

Arrange your own financing, but do not mention that until you get “in the box” which is where you are talking to the finance person.

Go to the dealership. Negotiation on the phone or via email is seen as a waste of time for the dealer.

Schedule your visit on a slow day.

Very early in the discussion, tell the salesperson that you will rate them as perfect across the board on the survey if you buy a car.

As a person of integrity, actually follow through and rate the salesperson as perfect when you receive the survey.

Be honest and tell the salesperson what you want and what you are willing to pay. Do not play games here. Be honest.

Close on the first or second pencil if you can live with the numbers.

Feel free to walk away at any time. State that you think the numbers are too far apart. Sincerely thank the salesperson for his or her time, stand up, then walk out..

^^ Thank you Marty. All very interesting. By the way, I did purchase a new SL+ from a different dealer as they were willing to negotiate the price way more than the other dealer (see my post on page 3 of this thread with the details). Thank you again!

Just to add to the above, and this is important: don't mention having a vehicle to trade in until the purchase or lease deal is finalized. Being honest is generally important, but if asked early on if you have a trade, say "I don't think so" or even "no." This gives you the true value for your trade.

Just to add to the above, and this is important: don't mention having a vehicle to trade in until the purchase or lease deal is finalized. Being honest is generally important, but if asked early on if you have a trade, say "I don't think so" or even "no." This gives you the true value for your trade.

While I understand the anxiety on trade value, having been on both sides of car purchases, I cannot recommend this approach. If the intent is to understand the true value of a trade, go to Carmax and get a cash offer before negotiating the purchase of a new car. When a car buyer kinks a deal through deception, the salesperson and his/her managers realize that the customer might not be honest. When a sales manager senses a need to protect the dealership from a customer’s deceit, that customer’s negotiating leverage evaporates.

The problem with mentioning a trade in advance is that it is just too easy for the dealership to "adjust" their offer to make the trade seem appealing, but give less in discounts. It is just too easy for them to then make an offer that appears to give a generous trade-in value, but that actually does the equivalent of greatly discounting it. I'm not talking about not mentioning the trade until after the paperwork is signed, just waiting for a written offer on the new car before negotiating the trade. I'm sure it's more hassle for the dealership that way, but you can thank dishonest dealerships for that.